Let’s start with a definition, Market Segmentation refers to the process of breaking a broad target audience into smaller, more specifically defined groups and furthermore splitting the market into sub-groups which makes it more approachable as a whole and helps you create more targeted and curated marketing strategies for different audiences. With segmentation, you can create different marketing strategies for your prospects. The right messaging leads to a probability to click, and therefore a stronger chance of a conversion.
Data-driven segmentation can eventually lead to higher revenue and lower financial risk.No need to restrict yourself to one approach. Market segmentation lets you apply the best-proven methods for each customer group.Better targeting and curated messages lead to higher response rates.When you meet your audience’s needs, they are likely to remain loyal to your brand. Segmentation can be Demographic, Geographical, Behavioral or Psychographic. The kind of audience you cater to and the type of business you run will determine the best strategy for you.
Splitting your target market by personal attributes like age group, gender, marital status, family size, levels of educational attainment, and income is demographic segmentation Geographical segmentation is a subset of demographic segmentation in which you break the audience based on geographical location.Geographical location impacts language and timezone and has impacts on purchasing habits, pricing level, and cultural considerations.
Behavioral segmentation is about creating groups based on online behavior represented by engagement metrics,through which visitors reach your site, the devices they use to access your content, popular content, preferred payment method, and more. Psychographic segmentation includes analyzing what your audience already knows about you and your products. Sometimes a person’s perspective can even be a prerequisite for being part of your audience, and the way your audience perceives you relative to others in the industry can impact their decision.
Three tips for effective market segmentation. You’re on the right track if more than one type of market segmentation seems beneficial to your company. For better focus, most businesses combine segmentation techniques.
Keep these three points in mind when creating your market segmentation strategy:
Your segmentation variables should be measurable: To create an effective marketing strategy, you need to measure and analyze segment performance and compare the results with previously determined estimates.
Choose criteria that are related to the buyer’s purchase journey and could affect the purchasing decision: Let’s say you are offering men jeans. Segmenting by age would result in more effective marketing. But if you offer a streaming service, age may not be relevant, and you should consider behavioral-based segments, such as device distribution or session duration.
Monitor segment performance: Segment content adaptation or experiment with various marketing avenues. As they progress through the funnel, specific prospects may switch from one segment to another based on evolving behaviors or preferences.
Eight advantages of market segmentation:
There are many ways that data-driven segmentation can boost your overall marketing efforts and increase revenue while lowering financial risk. Here are some of advantages of market segmentation:
1. Create more powerful tactics: There’s no need to stick to just one strategy. Applying market segmentation enables you to use the most effective strategies for each customer segment.
2. Develop messaging that is razor-focused: Instead of attempting to communicate the same message to everyone, focus your marketing efforts on the particular pain points of your customer base.
3. Boost response times: Better targeting and message curation lead to higher response rates. In turn, you can lower the overall cost of your marketing campaigns and boost the return on your paid advertising.
4. Attract the ideal clientele: Prospects who are genuinely interested in your product are drawn in by marketing messages that are more powerful and personalised.
5. Boost customer retention and brand loyalty: They are more likely to stick with your brand if you meet more of their needs.
6. Increase your range: If you refer to your entire target audience as a whole, you might miss out on niche markets.
7. Encourage the creation of new products: You can better understand your audiences’ needs by segmenting your audience. Utilize this knowledge to create features that are specifically targeted at them or to introduce new products that address their needs.
8. Aid in other business areas decision-making: You can better accommodate the audience in other areas, such as pricing, distribution, and design, by analysing the preferences of various segments.
Only when market segmentation is combined with data-driven insights will it produce meaningful results. You can segment your audience even in a niche market to create more specialized marketing campaigns and improve user experience.Determine the useful insights you need to develop a well-balanced marketing strategy once you gather and analyze this data.